Income Tax raids on seven largest onion traders in Nashik has busted the cartel that was controlling India's onion trade. Lasalgaon, near Nashik, is the center of wholesale onion trade in India and controls the retail rate of the vegetable widely used in cooking. High rates of onion are known to trigger political defeats, and therefore government agencies are now closely watching the market here.
The agencies noticed an abnormal rise in the prices of the root vegetable at the wholesale market and found that a few traders purchased the onions at lower rates and then sold them at four to five times that rate. The traders, Omprakash Ranka, Kantilal Surana, Sohan Seth Bandh, among others, were kept under watch and eventually raided on Tuesday night.
"The markets, that receive 500 to 600 trucks of onions every day, have been shut since Wednesday and are likely to open only on Monday.
Trucks from here go directly to major markets and therefore supply is by and large unaffected," said an official. "We will know the larger impact of the raids only later."
The raids however caused the rates to plummet as much as 35 percent from an artificial high. "Till July 24, onions were sold at Rs 500 to Rs 800 per quintal," said a government official. "The prices started surging suddenly in August, and rose to Rs 2500 to Rs 2650 per quintal. This sudden rise set off alarm bells."
The official said they had reason to believe that prices would continue to rise and hence began to monitor the market.
"We found that these traders had created artificial shortage and made profits that were way beyond what was being shown in the books. The I-T crackdown will ensure that traders remain under control," said a government official.
Lasalgaon onion market is one of the biggest markets on Asia and 35 percent of India's onion trade takes place there. "Every day, about two lakh quintals of onions arrive here and the traders who were raided control at least 90 percent of the business. Imagine how much money they made in just 15 days," sources added. Rough estimates suggest the traders pocketed at least Rs 600 crore in just two weeks.
While supplies to Lasalgaon and Pimpalgaon were affected initially, markets are expected to function normally from Monday onwards. Mumbai remained unaffected as supplies had arrived at Vashi APMC before the raids.
"We are getting 80-100 truckloads of onions every day," said Ashok Walunj, a trader and ex-director of APMC. "The retail rate here is Rs 12 to Rs 16 per kg which is normal. It may go up a little later because of scanty rainfall in Maharashtra and floods in Gujarat and Rajasthan."
PEELING THE LAYERS
- 35% of India’s onion trade takes place at Lasalgaon, near Nashik. It is one of the biggest markets in Asia
- In August, onion prices shot from Rs 500 to 800 per quintal to Rs 2,500 to 2,650 per quintal
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